Strong earnings keep European indexes pinned near peaks

FAN Editor
German share price index DAX graph is pictured at the stock exchange in Frankfurt
FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, November 8, 2021. REUTERS/Staff

November 9, 2021

By Anisha Sircar

(Reuters) -European shares were trading near record highs on Tuesday, with strong corporate earnings aiding sentiment, while investors awaited fresh U.S. inflation data for clues on the direction of interest rates.

The pan-European STOXX 600 inched up 0.1%, holding just below its record peak hit last week.

Auto stocks offered the biggest boost as Renault rose 4.5% to the top of France’s CAC 40 after its Japanese alliance partner Nissan reported a quarterly profit and hiked its full-year forecast.

The STOXX 600 is on its ninth straight session of gains, with France’s CAC 40 and Germany’s DAX breaching new records in the first week of this month on the back of strong corporate earnings and the European Central Bank’s dovish stance.

“The equity rally has been impressive,” said Ankit Gheedia, head of BNP Paribas’ equity and derivatives strategy for Europe.

“How long companies can keep profit margins elevated is going to be the key indicator for when the bull market is over, and, so far, all signs suggest profit margins should stay supported in the medium-term.”

While upbeat earnings forecast from Primark-owner AB Foods supported British stocks, insurers were a drag on continental European markets. German group Munich Re fell after warning of more COVID-related losses in its reinsurance business. [.L]

British insurer Direct Line also slipped 1.8% after reporting lower-than-expected growth in quarterly premiums.

Among gainers, German agriculture and pharmaceutical firm Bayer climbed 2.8% after posting higher quarterly adjusted earnings that beat analysts’ forecasts.

French supermarket group Carrefour rose 1.0% after pledging 3 billion euros between 2022 and 2026 for its digital push.

Wall Street stocks ended slightly higher on Monday as investors cheered the passage of the U.S. infrastructure bill, but gains were capped due to a cautious mood ahead of the release of inflation data on Wednesday. [MKTS/GLOB]

Polish e-commerce platform Allegro fell 5.9% after reiterating its 2021 targets despite reporting a quarterly profit beat.

(Reporting by Anisha Sircar in Bengaluru; Editing by Subhranshu Sahu and Anil D’Silva)

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